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18 December 2023 

Hon. Chrystia Freeland 

Minister of Finance 

Deputy Prime Minister 
90 Elgin Street 
Ottawa, Ontario K1A 0G5 

Via email: 

Dear Minister Freeland: 

Re: Employment Insurance Deficit 

Chambers of Commerce from across Canada are urging you to extend the current Canada Emergency Business Account (CEBA) repayment deadline by one year to 18 January 2025 while maintaining access to the forgivable portion – after this date converting to interest-free loans.  

Almost 900,000 CEBA loans were approved across Canada. Many businesses had no choice but to take on this loan due to circumstances beyond their control. This includes businesses in some of the hardest hit industries such as the retail industry and tourism sector. Mandatory business closures and other government health restrictions left businesses with severe income losses and cash flow issues. 

Many small businesses have very tight profit margins that are sensitive to any disruption of business. Despite their best efforts, high interest rates, inflation and increased labour costs are making it difficult for small-and-medium size businesses to keep their heads above water, let alone make any dent in the debt during the pandemic. A recent analysis of over 15,000 Canadian businesses found that inflation, input costs, and interest/debt costs are the three most acute obstacles faced by business (at 56%, 40% and 38%, respectively), and the smaller the firm, the more constrained they are by debt1

Moreover, recent surveys focused on CEBA loan-holder companies reveal that: 

• 49% of small businesses are still making below normal revenues2

• 50% of Canadian foodservice operators are currently operating at a loss or breaking even compared to 12% pre-pandemic3; and, 

• 45% of Canada’s tourism businesses are likely or somewhat likely to close within the next three years without government intervention into their mounting debt load4

Businesses, associations and others have been calling for the federal government to provide a further extension of the repayment and partial loan forgiveness deadline that is looming on 18 January 2024. We note that this was not part of your Fall Economic Update last month, but your government still has time to act. 

Many small businesses are hampered from repaying their CEBA loans not only because of a slower-than-expected recovery for their operation, but also because of the large amount of debt incurred from other sources. According to a January 2023 Statistics Canada report, more than 20% of all businesses were carrying a greater debt load than at the beginning of the pandemic and they addressed the disparity amongst sectors and size of business5

More businesses in accommodation and food services reported a greater current debt level than businesses in other sectors, at over one-third (36.6%), followed by businesses in arts, entertainment and recreation (29.7%) and administrative and support, waste management and remediation services (29.5%). 

Additionally, smaller businesses generally were more likely to report a greater current debt level: 

One-quarter (25.7%) of businesses with 5 to 19 employees, and over one-fifth of businesses with 1 to 4 employees (20.8%) and 20 to 99 employees (21.8%) reported that their current debt level was greater than it was prior to the start of the pandemic, in contrast with 12.2% of businesses with 100 or more employees who reported the same.” 

It is clear that many small businesses are still trying to recover from the pandemic, related public health restrictions and now inflation and labour costs that we haven’t seen in a generation or more. While in many ways we’ve moved on from COVID-19, these remain extraordinary economic times and the federal government must act in extraordinary ways to stabilize our small business sector and ensure the path to prosperity is not weighed down by unnecessary debt. 

Extending the repayment timeline for the CEBA loan without losing access to the forgivable portion would give many small-and-medium size businesses the stability and certainty they need to get back on their feet on a path to prosperity. 

We urge you to quickly address this important matter. 


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